Sahara investors could be fictitious, says Supreme Court

New Delhi: The Supreme Court Tuesday expressed apprehension that the investors who put their money in Sahara's Optionally Fully Convertible Debentures (OFCD) in 2008 could be fictitious.

Security officials escort Sahara group chairman Subrata Roy (C) on his arrival at the Supreme Court in New Delhi on March 4, 2014. Pic: AFP

The bench of Justice K.S. Radhakrishnan and Justice J.S. Khehar expressed their apprehension as it was told that 80 percent of the more than three crore investors have been paid back their invested amount and there were no demands.

The court's apprehension came during the hearing of a contempt petition by the Securities and Exchange Board of India (SEBI) against Sahara chief Subrata Roy, its three directors and two companies - Sahara India Real Estate Corporation Limited and Sahara Housing Investment Corporation Limited - for not complying with the Aug 31, 2012 and subsequent orders.

The apex court by its Aug 31 order had asked Sahara to deposit Rs.24,000 crore with market regulator SEBI so that it could be returned to investors.

The two Sahara Companies SIRECL and SHICL had collected this money through OFCD.

As counsel C.A. Sundaram told the court that Rs.19,000 crore of investors' money would be mobilised by selling unencumbered properties of Sahara, the court said it was hearing this for the last one and half years but nothing has happened.

The court repeatedly asked the counsel as to why Sahara did not comply with its orders, and said it repeatedly gave opportunities but those were of no avail.

"That was our indulgence. You said go to hell. We accommodated you again and you pushed us in the corner. That is what has brought us here," the court told counsel Ram Jethmalani as he urged the court to let past be past and consider the latest proposal by Sahara.

"It was for it to sell the properties, it was its own headache as there was many ifs and buts," the court said adding "it is your own choosing. We tried our best but you advanced one excuse after the other. You never allowed the matter to proceed".

"Should every litigant behave with us like this? Should we allow them to behave like this? Why you allowed your client to behave like this?" the court told Jethmalani as he sought to impress upon the court about the sincere efforts of Sahara to comply with the court's various orders.

As Sahara Tuesday offered to sell its properties to mobilise the money backed by bank guarantees, the court told it that let the sale be done by it as it can fetch best prices.

Counsel Arvind Dattar, appearing for SEBI, told the court that Sahara had better understanding of the real estate market plus it was in this business all over the country.